ITO, Bangalore V. Shri. Tengavkar Mahammed Ameenullah, Bangalore

ITA 795/BANG/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1471 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 07-09-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 17-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR P K SRIHARI
• Assessee Lawyers: A C RAJU
• Keywords: Unexplained cash credit; Peak credit
• Section: 80C; 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE B BENCH, BANGALORE BEFORE SMT ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER AND SHRI ABRAHAM P GEORGE, ACCOUNTANT MEMBER ITA NO.795(BNG.)/2014 (ASSESSMENT YEAR : 1981-82) THE INCOME TAX OFFICER, WARD-1(2), BANGALORE APPELLANT VS SHRI TENGAVKAR MOHAMMED AMMENULLAH, NO.2, PETTIGREW STREET, BANGALORE-560 002. PANO.AEVPAA 6355F RESPONDENT REVENUE BY : DR. P.K.SRIHARI, ADDL.CIT ASSESSEE BY : SHRI A.C.RAJ U, CA DATE OF HEARING : 07-09-201 5 DATE OF PRONOUNCEMENT : 11-09-2015 O R D E R PER SMT ASHA VIJAYARAGHAVAN, JM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT(A), BANGALORE DATED 18-02-2014 FOR THE ASSESSME NT YEAR 2009-10. 2. THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10 ON 31-0-2010 DECLARING THE TOTAL INCOME AT RS.1,56,724/-. THE RETURN WAS INITIALLY PROCESSED U/S 143(1) AND THEN SELECTED FOR SCRUTINY. IN THE ASSESSMENT CONCLUDED U/S 144 OF THE ACT VIDE ORDER DATED 2 ITA NO.795(B)/2014 29/12/2011, THE TOTAL INCOME HAS BEEN DETERMINED AT RS.42,76,324/- BY BRINGING TO TAX CASH CREDITS OF RS.41,19,600/- AND DISALLOWING THE DEDUCTION OF RS.,100,000/- CLAIMED U/S 80C OF THE I T ACT. 3. AGGRIEVED THE ASSESSEE FILED APPEA L BEFORE THE CIT(A) AND CHALLENGED THE VALIDITY OF THE ASSESSMENT, ON THE G ROUND THAT THE ITO PASSED THE ASSESSMENT ORDER U/S 144 WITHOUT CONSIDE RING THE REQUEST MADE BY THE ASSESSEE TO TRANSFER THE FILES TO VELLO RE ITO. THE CIT(A) RELYING ON THE DECISION OF THE HONBLE PUNJAB & HAR YANA HIGH COURT IN THE CASE OF LT. COL. PARAMJIT SING VS CIT (220 ITR 446) HELD THAT THERE IS NO MERIT IN THE ASSESSEES OBJECTION AND DISMISSED THE GROUNDS OF APPEAL. 4. WITH RESPECT TO THE GROUND OF APPEAL REGARDING THE ADDITION OF THE ENTIRE CASH DEPOSITS OF RS.40,19,600/- AS UNEXPLAIN ED CASH CREDITS. THE CIT(A) OBSERVED AS FOLLOWS; THE FINDINGS OF THE AO WAS THAT DURING THE PREVIO US YEAR RELEVANT TO AY: 2009-10, THE ASSESSEE HAS DEPO SITED CASH TOTALING TO RS.40,19,600/- IN HIS SAVINGS BANK ACCOUNT BEARING NO.877794 AT RBS BANK, MUMBAI (MAHARASHTRA) . THE AO HAS GIVEN OPPORTUNITY AND ALSO BY ISSUE OF S HOW- CAUSE TO FURNISH EVIDENCE IN SUPPORT OF CASH DEPOSI TS MADE INTO THE AFORESAID BANK ACCOUNT. SINCE, THE ASSESS EE FAILED TO FURNISH DETAILS/EXPLANATION ENTIRE CASH DEPOSITS 3 ITA NO.795(B)/2014 CONSIDERED TO BE UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT AND BROUGHT TO TAX. 5. THE LEARNED AR SUBMITTED BEFORE THE CIT(A) IN W RITING AS UNDER; ON MERIT, WE SUBMIT THE FOLLOWING INFORMATION FOR YOUR KIND CONSIDERATION. THE ASSESSEE FILED RETURN OF INCOME SHOWING THE TOTAL TAXABLE INCOME AS RS.1,56,720/- OUT OF WH ICH RS.68,000/- SHOWN AS INCOME FROM OTHER SOURCES. T HIS INCOME WAS GENERATED FROM AGENCY COMMISSION EARNED ON PURCHASE OF RAW SKINS AT MUMBAI. THE ASSESSEE USE D TO DEPOSIT THE CASH AROUND RS.2.00 LAKHS (COLLECTED FR OM THE SMALL TANNERS) EVERY TIME AT CHENNAI, WHENEVER HE V ISITS TO MUMBAI AND DRAW THE CASH AT MUMBAI TO PAY THE RAW S KIN PARTIES AT MUMBAI. FROM THESE TRANSACTIONS, THE A SSESSEE EARNED AND SHOWED RS.68,000/- AS INCOME FROM OTHER SOURCES. THE AO HAS CONSIDERED THIS INCOME TO THE EXTENT OF RS.68,000/- WHILE ARRIVING THE TAXABLE INCOME OF TH E ASSESSEE. THE AO WAS INCORRECT AND UNJUSTIFIED IN TREATING THE ENTIRE CASH DEPOSIT INTO THE BANK ACCOUNT WITHO UT CONSIDERING CORRESPONDING DRAWL IN THE BANK ACCOUNT . IT IS PERTINENT TO NOTE THAT ALMOST ALL THE TRANSAC TIONS (BOTH DEPOSIT AND DRAWING) IN THE BANK ACCOUNT ARE IN CAS H AND AS SUCH THERE IS MERIT IN THE SUBMISSION OF THE ASSESS EE THAT CASH DEPOSITS ARE SUPPORTED AND COVERED BY CASH PUR CHASES AT MUMBAI. FURTHER, THERE ARE CORRESPONDING WITHDRA WAL 4 ITA NO.795(B)/2014 WHICH IS ON ACCOUNT OF PURCHASE AND THIS FACT ALSO SUPPORTS THE CLAIM OF THE ASSESSEE. IN THE LIGHT OF ABOVE SUBMISSION, THE AO IS NOT COR RECT IN IS REGARDING IN THE CASH DRAWING ENTRIES IN THE BANK A CCOUNT WITH REFERENCE TO BUSINESS ACTIVITIES DONE AT MUMBA I, THE ENTRIES IN EH BANK ACCOUNT HAVE TO BE CONSIDERED IN TOTALITY AND IT IS NOT OPEN TO DISREGARD WITHDRAWALS AND MAK ING ADDITION IN RESPECT OF ALL THE CREDIT ENTRIES ON CU MULATIVE BASIS. HENCE, WE REQUEST YOUR GOOD SELF TO DIRECT THE AO TO DELETE THE ADDITIONS OF RS.40,19,600/- WITH REGARD TO CLAIM OF DEDUCTION 80C OF THE ACT, T HE FOLLOWING COPIES OF PAYMENTS ARE ENCLOSED. KINDLY DIRECT THE AO TO ALLOW THE DEDUCTION UNDER SECTION 80C OF THE IT ACT IN FULL. 6. IN THE REMAND REPORT THE AO COMMENTED THAT THE A SSESSEES CONTENTION IN NOT ACCEPTABLE SINCE NO SUPPORTING EV IDENCE WERE PRODUCED EITHER AT THE TIME OF ASSESSMENT PROCEEDINGS OR DUR ING THE APPELLATE PROCEEDINGS. THE CIT(A) AFTER GOING THROUGH THE BA NK STATEMENTS OBSERVED THAT THE DEPOSITS WERE MADE IN CASH AND ALSO BY CHE QUE ON SEVERAL OCCASIONS. FURTHER, THE ASSESSEE ALSO MADE WITHDRAW ALS BOTH AS CASH AS WELL AS CHEQUES. HENCE, THE CIT(A) WAS OF THE VIEW THAT THE ENTRIES IN THE BANK ACCOUNT IS TO BE CONSIDERED AS A WHOLE AND IT IS NOT OPEN TO DISREGARD 5 ITA NO.795(B)/2014 WITHDRAWALS AND TO MAKE ADDITION IN RESPECT OF ALL THE CREDIT ENTRIES ON CUMULATIVE BASIS. THE CIT(A)HELD THAT THE AO SHOUL D HAVE ADOPTED PEAK CREDIT DURING THE YEAR BASED ON THE BANK ENTRIES. THE CIT(A) FOUND THE PEAK CREDIT TO BE AT RS.3.00 LAKH AND TO THAT EXTE NT HE CONSIDERED THE SAME AS UNEXPLAINED DEPOSIT IN CASH TO BE INCLUDED AS INCOME OF THE ASSESSEE. THE ADDITION TO THE EXTENT OF RS.3.00 LA KHS WAS RETAINED BY THE CIT(A) AND NOT THE ENTIRE CREDIT OF RS.40,19,600/- AS MADE BY THE AO. 7. AGGRIEVED THE DEPARTMENT IS IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS; 1.THE ORDER OF THE CIT(A) IS OPPOSED TO LAW AND FA CTS AND CIRCUMSTANCES OF THE CASE. 2. THE CIT(A) ERRED IN RESTRICTING THE ADDITION TO RS.3.00 LAKHS FROM RS.40,19,600/- WITHOUT APPRECIATING THAT THE ASSESSEE DID NOT PRODUCE THE DETAILS AS TO THE SOUR CES OF THE CASH CREDITS INTO THE BANK ACCOUNT EITHER DURING TH E ASSESSMENT PROCEEDING OR DURING THE REMAND PROCEEDI NGS. 3. THE CIT(A) ERRED IN CONSIDERING THAT THERE WAS A MERIT IN THE ASSESSEES SUBMISSION THAT THE ACCOUNTS HAS TO BE VIEWED AS A WHOLE WITHOUT APPRECIATING THAT NOWHERE IN HIS SUBMISSION HAD THE ASSESSEE SUBMITTED THAT THE CASH WITHDRAWALS MADE AT MUMBAI WERE RE-DEPOSITED AT CHE NNAI. 6 ITA NO.795(B)/2014 4. THE CIT(A) ERRED IN HOLDING THAT THE AO SHOULD H AVE ADOPTED THE PEAK CREDIT WITHOUT PROVIDING ANY JUSTI FICATION FOR THE SAME AND WITHOUT BRINGING ONTO RECORD ANY INSTA NCE OF CASH WITHDRAWAL HAVING BEEN RE-DEPOSITED INTO THE A CCOUNT. 5. THE CIT(A) ERRED IN NOT PROVIDING THE BANK STATE MENT TO AO FOR HIS COMMENTS AND ALSO ERRED IN NOT PROVIDING TH E WORKING OF THE ALLEGED PEAK CREDIT. 6. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URG ED AT THE TIME OF HEARING, IT IS HUMBLY PRAYED THAT THE ORDER OF THE CIT(A) BE REVERSED AND THAT OF THE AO BE RESTORED. 8. ON THE OTHER HAND, LEARNED DR RELIED ON THE ORD ER OF THE AO. 8.1 THE LEARNED COUNSEL FOR THE ASSESSEE SHRI A.C. RAJU, REITERATED THE CONTENTIONS RAISED BEFORE THE CIT(A). 9. WE HAVE HEARD BOTH PARTIES. WE ARE IN CONFORMI TY WITH THE ORDER OF THE CIT(A) WHEREIN HE HAS HELD THAT IT IS NOT OP EN TO DISREGARD WITHDRAWALS AND TO MAKE ADDITION IN RESPECT OF THE CREDIT ENTRIES ON CUMULATIVE BASIS. THE CIT(A) HAS RIGHTLY TAKEN THE PEAK CREDIT AT RS.300 7 ITA NO.795(B)/2014 LAKHS AND INCLUDED THE SAME TO THE INCOME OF THE AS SESSEE AS UNEXPLAINED DEPOSIT. WE CONFIRM THE ADDITION TO THE EXTENT OF RS.3.00 LAKHS MADE BY THE CIT(A), SINCE IT IS BASED ON SETTLED ACCOUNTING PRINCIPLES. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 11 TH SEPTEMBER, 2015. SD/ - (ABRAHAM P GEORGE) SD/ - (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE: D A T E D : 11-09-2015 AM* COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)-II BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER, AR,ITAT, BANGALORE